Most of the tedious work is actually done by a tool in Photoshop (version CS3 and higher).

The tricky part for the photographer is the technique for shooting the images in a way that the photomerge tool will handle with minimal distortion.

You have to do mostly manual settings, as the exposure would change as you pan across the subject to take the individual images, and make sure to include enough overlap so that the software will be able line them up properly.

I found the trickiest part to be getting the tripod dead level so you're panning on a level plane. Especially when you're shooting vertical rather than horizontal